In a trade notice, the Directorate General of Foreign Trade (DGFT) said, “Trade and Industry is hereby informed that the Interest Equalisation Scheme for Pre and Post shipment Rupee Export Credit, which had earlier been extended till September 30, 2024 has been further extended by three months up to December 31, 2024”.
It also said the fiscal benefits of each MSME, on aggregate, will be restricted to Rs 50 lakh for 2024-25 till December 2024.
“MSME manufacturer exporters who have already availed equalisation benefit of Rs 50 lakh or more till 2024-25 till September 30, 2024, will not be eligible for any further benefit in the extended period,” it said, adding, “this extension shall be valid for three months or such revised approval, which would be received prior to the lapse of the extension of three months”.
On December 8, 2023, the Union Cabinet approved an additional allocation of Rs 2,500 crore for the continuation of the scheme up to June 30.
The scheme helps exporters from identified sectors and all MSME manufacturer exporters to avail of rupee export credit at competitive rates at a time when the global economy is facing headwinds. Exporters get subsidies under the Interest Equalisation Scheme for pre- and post-shipment rupee export credit. The additional outlay of Rs 2,500 crore, over and above the current outlay of Rs 9,538 crore under the scheme, was made available to bridge the funding gap to continue the plan up to June 2024.
The scheme was started on April 1, 2015, and was initially valid for five years up to March 31, 2020. It has been continued thereafter, including a one-year extension during Covid-19, and with further extensions and fund allocations.
The scheme is fund-limited, and benefits to individual exporters were earlier capped at Rs 10 crore per annum per IEC (Import Export Code). Now the cap is Rs 50 lakh.
India’s exports registered a steepest decline in 13 months, declining 9.3 per cent in August to USD 34.71 billion due to global economic uncertainties, while the trade deficit soared to a 10-month of USD 29.65 billion.
Exports during April-August this fiscal year increased 1.14 per cent to USD 178.68 billion, and imports grew 7 per cent to USD 295.32 billion.
Commenting on the move, Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said they have requested for extending the scheme on a long-term basis, covering all exporters in employment intensive sectors and enhancing the cap as lowering to Rs 50 lakh will hit MSMEs as well, at the most challenging time with huge headwinds in global trade.